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THE PRIME MINISTER

THE PRIME MINISTER

DIRECTIVE No.409-TTg ON THE 15th OF JULY 1995 OF THE PRIME MINISTER ON DRAFTING THE SOCIO-ECONOMIC DEVELOPMENT PLAN AND DRAFTING THE STATE BUDGET FOR 1996

In furtherance of the Resolution adopted by the IXth National Assembly at its 6th Session (in October 1994) on the tasks in 1995, the various branches, levels and grassroots units throughout the country have made great efforts and obtained important results in carrying out the targets set: In carrying out the plan for the first 6 months of 1995, production grew at a fairly good rate; the external economic relations developed to a new extent; many aspects of social life changed for the better; the people's living conditions were stabilized and improved step by step. However, there remain outstanding problems and great difficulties, notably: the State budget is still under constraint as a result of low revenues as compared with the plan, tax losses and tax evasion are still widespread, budget deficit is large; investment capital for capital construction in the budget and in credits is very low; the inflation rate remains high; smuggling is widespread.

The Prime Minister requests the Ministries, branches and localities to strive to fulfill and overfulfill the 1995 plan, and to begin drafting the general plan for 1996 with the following contents:

I. DIRECTING AND EVALUATING THE IMPLEMENTATION OF THE 1995 PLAN:

1. Directing the implementation of the 1995 plan:

- The State Planning Committee in collaboration with the Ministry of Finance and the branches concerned shall review the major balances of the economy, ensure the adequate supply of materials, raw materials and fuel for production, make full use of the markets available for the sale of products, and focus on directing all units to strive to operate at full capacity to increase their output, economize on spending, and cut down on production costs...

- To intensify inspection and supervision work, collect full budget revenues, and fight against smuggling. To urge all units to submit to the State budget all the remainder of the revenues collected from 1994 and the first 6 months of 1995. To take all necessary measures to fulfill the task of tax collection which the National Assembly has passed and the Prime Minister has assigned to the Ministries, branches, and localities.

- The People's Committees of the provinces and cities directly under the Central Government shall direct the local administration at different levels to re-inventorize the land fund at each commune and ward, inspect the use of land and housing that are public property at the central and local units based in their locality. On this basis, they shall begin the transfer of land use right and land allotment at the same time with the sale of State-owned houses as stipulated, and try to fulfill and overfulfill the plan of collecting revenues from these sources to have more capital for infrastructure construction. The Ministries, branches, and the People's Committees of the provinces and cities directly under the Central Government should fully carry out the Prime Minister's Directive on re-organizing the head offices of the administrative and professional agencies; carry out immediately the policy on handling those parts of office space still left unused or being rented, particularly in Hanoi City and Ho Chi Minh City.

- The State Planning Committee and the Ministry of Finance in collaboration with the other Ministries, branches, and project owners that are using foreign loans and aid to review the tempo of project implementation, solve any problems that have arisen, and actively negotiate with the foreign partners with a view to quickening the tempo of capital retrieval by carrying out the projects in accordance with the agreement and plan.

- To review the capital construction projects, and resolutely cancel any projects that are not really necessary, such as office buildings and conference halls, and any projects that fail to comply with the procedure of investment as stipulated.

From now to the end of the year, no additional budget allocation shall be granted, except for really urgent cases which shall be decided by the Prime Minister. The Ministries, branches, and localities must practice thrifty spendings, review the spending tasks in order to meet the urgent spending needs that arise, and resolutely refrain from spending when they have no financial source.

- They must strictly practice economy, fight wastefulness, corruption, and smuggling; carry out financial-monetary measures and regulate the market with a view to achieving the target of controlling inflation during the last 6 months of this year.

2. Evaluating the implementation of the 1995 plan:

- Reviewing the implementation of the National Assembly's Resolution on the tasks of 1995; evaluating the results in implementing the plan, targets, programs, and projects set for 1995, confirming what has been done and what is to be done, and analyzing the concrete causes, while paying attention to reviewing the progress and shortcomings in allocating and regulating the budget.

- On the basis of the implementation of the 1995 plan, evaluating the economic and social situation during the past 5 years (1991-1995), and comparing it with the tasks of the five-year plan and the new requirements raised at the Mid-Term National Conference of the Party. Paying attention to evaluating and analyzing the progress and shortcomings in stabilizing and developing the economy, restructuring the economy along the line of industrialization and modernization, developing cultural and social work, consolidating national defense and security, maintaining social order and security. On this basis, reviewing the exercise of the function of State management, particularly in renewing the mechanism and policies, building and enacting laws, fighting against corruption and wasteful spending of public funds, against smuggling and social vices. On this basis, drawing experiences for the making of plans and the direction and regulation of the plans for 1996 and for the 1996-2000 period.

II. DRAFTING THE PLAN FOR ECONOMIC-SOCIAL DEVELOPMENT AND DRAFTING THE BUDGET FOR 1996

The 1996-2000 five-year plan is being drafted for submission to the VIIIth Party Congress. The Congress will adopt the main tasks and targets in the direction of striving to successfully carry out the strategy of stabilizing and developing the economic - social situation from now to the year 2000 which were already passed by the VIIth Party Congress with a view to further raising the economic growth rate as required by the new stage of development.

1996 is the first year of the 1996-2000 five-year plan. We must focus on the task of achieving a higher economic growth rate than in 1995, while consolidating political and economic stability, continuing to accelerate the renewal process, making full use of the favorable opportunities and other advantages available in order to turn to account and satisfactorily use the domestic and foreign resources; harmoniously combining the achievement of economic growth with the settlement of urgent issues for cultural and social development and the consolidation of national defense and security; balancing the State budget on a firm and sound basis, and ensuring the availability of necessary reserves for easy regulation.

1. The main tasks for 1996:

a/ Continuing to create a favorable environment and conditions for the various economic sectors to bring into full play their resources for a healthy development; registering a fairly high and stable economic growth rate, speeding up economic restructuring in the whole national economy as well as in each branch and in each territorial area along the line of national industrialization and modernization, while carrying out the program of steadily stabilizing the economy and society. The economic growth rates for 1996 as compared with 1995 are estimated as follows:

- Gross domestic product to increase by 9.5-10%.

- Agro-forestry-fishery output value to increase by 4.3-4.5%.

- Industrial output value to increase by 14-15%.

- Services output value to increase by 13-14%.

b/ Striving to stabilize and markedly improve the national finance. Collecting taxes and fees in accordance with law, registering and making full use of all revenues, striving to collect all that is due; ensuring reasonable and economical supply of funds for regular spending needs, repaying the debts due, and putting a higher percentage and amount of capital into development investment than in the previous years. At the same time, seizing every opportunity to rapidly increase the ODA sources, and actively mobilizing medium- and short-term loans from among the public at a reasonable interest rate to make up for the budget deficit. Stabilizing and consolidating the purchasing power of the Vietnam Dong, taking uniform measures to keep the inflation rate at around 10%, and raising the capability to bring inflation under control and to stabilize prices.

c/ Strongly developing the external economic relations with emphasis on export, while trying to replace imports with the products which can be efficiently made in the country, promoting the comparable advantages of the whole country as well as of each area, rapidly increasing the competitiveness of goods and services, gradually meeting the new requirements in the cooperative and commercial relations with the other members of ASEAN, increasing export earnings by 25% over 1995, ensuring an adequate import of the main materials and equipment, and of the necessary consumer goods for the economy, and contributing to satisfactorily handling the money-goods relationship. Improving the investment environment in order to draw more ODA and FDI capital sources and modern technology from other countries to meet the requirements of economic-social development at home.

d/ Complementing the policy and applying many forms of mobilizing all sources of savings and self-investment for development of the people and enterprises in all economic sectors in order to broaden the scale of all-society investment, and raising the efficiency of using investment capital, bringing the total of investment capital of the entire society to 26-27% of GDP.

e/ Efficiently deploying the programs of cultural and social development with the capital sources of the State and the people, and with aid from foreign countries; creating new changes in the fields of education, training, culture, information, public health, population, family planning, science, technology and environment, providing employment, eradicating hunger and alleviating poverty, increasing the average income, and improving the people's living conditions.

f/ Continuing to step up the renewal process in all fields, combining economic renovation with administrative reform, raising the power and efficiency of the State apparatus.

g/ Maintaining political and social stability, creating a favorable environment for economic development; meeting the regular spending needs of the armed forces, and step by step developing the capacity of defending the country and keeping social order and security.

The Ministries, branches and localities should firmly grasp the above-mentioned tasks, clearly define the position of 1996, compare it with the practical situation of the branches and localities, make deep surveys and calculations to clearly identify the development resources in the year that can be turned to account in order to build a practical and highly efficient plan.

2. Clearly identifying the major balances of the entire country and of each locality, and the major balances which each Ministry is assigned; particularly the balances in budget and in investment for capital construction with the concentrated capital sources of the State, balances in money-goods and the main materials and goods. The Prime Minister draws the attention of the Ministries and localities to the following direction in arranging a number of major balances:

a/ The budget must be balanced in a positive and practical way; all budget revenues and expenditures must be included in the draft State budget, and they must be remitted to and disbursed by the State Treasury; the increased rate of tax and fee collection in the country must be greater than the increased rate of spending for regular spendings with a view to gradually raising the percentage of spending for development investment. The draft State budget must be steadily balanced with enough reserves for use in regulation so as to reduce the percentage of deficit in relation to GDP.

- Firmly upholding the spirit of economical spending, not spreading investment capital evenly, not allocating capital for the demands that are not yet really necessary, limiting the purchase of equipment that is not yet really necessary; continuing to suspend spendings for building new office headquarters, buying cars and expensive indoor decorations; the special cases must be considered and decided by the Prime Minister.

- Devoting about 70% of tax and fee payments to regular spendings, with priority given to the most important economic-social tasks and the task of national defense, the defense of the national sovereignty, security, and social order and safety.

- Using enough capital sources to resolutely clear all budget debts left over from the previous years.

- Enough budget reserves must be kept to meet spending needs for the execution of new policies, for urgent demands, and for use pending the new fiscal year.

- The State budget deficit must be kept at a level commensurate with the ability to mobilize mid-term and long-term domestic loans and foreign soft loans that are feasible. No banknotes shall be issued to make up for any State budget deficit.

b/ In capital construction, investment capital must be mobilized from the entire society, and must be used to meet the economic-social targets. The capital sources concentrated by the State through the budget and credits must be carefully calculated to fit the real ability of capital sources and must be efficiently utilized; it is absolutely necessary to draw programs and projects and to comply fully and strictly with the procedures stipulated. The mobilization of capital sources (budget capital, credits, enterprises' capital, depreciation capital, capital collected from the granting of land use right, capital collected from the sale of shares and bonds, foreign loans...) must be clearly defined to meet the investment requirement of each project. The State budget capital must be allocated mainly to the economic-social infrastructure projects which are not likely to retrieve capital; construction work must be concentrated and neatly completed, the volume of investment effected must be promptly paid, and investment should not be spread on many projects at the same time which may prolong the time of construction and cause wastefulness. With regard to those projects which can retrieve capital, the State shall work out a mechanism and encourage the units and enterprises concerned to seek appropriate capital sources.

c/ Ensuring money-goods balance on the basis of total supply and total demand, balancing supply and demand for a number of main commodities which are vital for production and life, and preventing "false fevers" in these commodities.

3. Special importance must be attached to solutions on policies and mechanism to ensure effective implementation of the plan. The Ministries, the ministerial-level Agencies, and the Agencies attached to the Government in their capacity as manager of each branch and field of activity shall issue, or propose to the authorized agencies to issue, in 1995 policies and mechanism aimed at continuing to step up the renewal process in the direction of fully liberating the production forces, ensuring an uninterrupted operation of the market mechanism, and strengthening the efficiency of the State management.

4. The Ministry of Finance shall study together with the other Ministries and localities how to supplement and amend the mechanism on the division of budget management and submit their proposal to the Government in August 1995 for decision in this direction: stabilizing revenue sources and expenditure tasks for the localities for a number of years, creating conditions for the localities to take the initiative in making their plan and deciding the budget of their localities, and encouraging the localities to turn to account their available potentials to increase their budget revenues and balance their budget.

5. The State Planning Committee and the Ministry of Finance must closely cooperate with each other in guiding the other Ministries and localities to make their plan suit the general situation, and ensure positive and steady balances.

- The State Planning Committee shall guide the Ministries and localities in drawing and completing their plans of economic-social development; work with the Ministries and localities, with the participation of the Ministry of Finance, on the economic-social plan, on investment projects for capital construction, and the national programs assigned and funded by the Central Government to the Ministries, branches, and localities.

- The Ministry of Finance shall guide the other Ministries and localities in building and completing the revenue plan, and drafting the State budget expenditure; work with the other Ministries and localities, with the participation of the State Planning Committee, on the revenue plan and drafting the State budget expenditure, and the national programs funded by the Central Government, and including them in the regular expenditure plans of the Ministries, branches and localities.

6. The tempo and time of implementation:

- Before the 10th of August 1995, the Ministries and localities must send their plans to the State Planning Committee and the Ministry of Finance.

- From now to the 10th of September 1995, the State Planning Committee and the Ministry of Finance as assigned above (Point 5) shall work with the other Ministries and localities and complete the plans for submission to the Government, the Committees of the National Assembly, and the 8th Session of the IXth National Assembly; and prepare to assign the plans in late December 1995 so that the Ministries, branches and localities can begin to carry out their plans right from the beginning of 1996.

The drafting and good implementation of the 1996 plan is of great significance in that it gives momentum to the implementation of the 1996-2000 economic-social plan. The Prime Minister requests the Ministers, the Heads of the ministerial-level agencies, the Heads of the agencies attached to the Government, and the Presidents of the People's Committees of the provinces and cities directly under the Central Government to closely direct the process of drafting and completing the 1996 plan, thus ensuring the implementation of the orientations, tasks and targets already set.

For the Prime Minister

Deputy Prime Minister

PHAN VAN KHAI